Purchase order vs proforma invoice: 7 things to check before paying a deposit
The short answer
A purchase order (PO) states what an importer wants to buy, while a pro forma invoice (PI) states what the overseas supplier proposes to provide. Before paying a deposit, compare the two documents for differences in specifications, price, quantities, payment terms, and shipping details.
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Purchase order vs proforma invoice: what is the difference?
The two documents should describe the same products and commercial agreement before the importer approves a deposit.
| Item | Purchase order (PO) | Pro forma invoice (PI) |
|---|---|---|
| Issued by | Buyer or importer | Supplier or factory |
| Purpose | What the buyer wants to purchase | What the supplier proposes to provide |
| When issued | Usually after negotiation | Usually after the factory reviews the order |
| Key details | Specifications, quantities, prices, requested dates | Confirmed descriptions, pricing, deposit terms, estimated dates |
| Next action | Factory reviews and responds | Buyer reviews before approving and paying a deposit |
Some importers negotiate entirely by email or WeChat rather than issuing a formal PO. In that case, compare the PI with the agreed quotation, approved specifications, and written correspondence. The absence of a formal PO makes it more important to confirm every detail on the factory’s document.
An example: 60 upholstered sofas and three discrepancies
Example
Consider a US importer ordering 60 upholstered three-seat sofas from a Chinese manufacturer. The prices are illustrative, chosen to keep the math simple. The buyer sends PO-2086, and the factory responds with PI-4312 requesting a deposit. The quantity is correct, but three other details do not match.
| Detail | Buyer’s PO-2086 | Factory’s PI-4312 |
|---|---|---|
| Product | Upholstered three-seat sofa | Upholstered three-seat sofa |
| Quantity | 60 sofas | 60 sofas |
| Seat cushion foam | High-resilience foam, 35 kg/m³ | Standard foam |
| Unit price | $420 | $440 |
| Order total | $25,200 | $26,400 |
| Deposit | 30% ($7,560) | 50% ($13,200) |
| Shipping term | FOB Shenzhen | FOB Shenzhen |
The $20 difference per sofa raises the quoted order value by $1,200. More significantly, the factory is requesting $13,200 upfront instead of the agreed $7,560, a $5,640 difference in the immediate deposit. The foam specification also needs clarification because “standard foam” does not establish the agreed density or resilience.
The factory might have used an older quote or its default deposit terms. The buyer should resolve the three discrepancies before approving the PI or transferring funds, rather than assuming the factory will follow the earlier conversation.
7 things to check before approving a pro forma invoice
These seven checks turn a document comparison into a repeatable pre-deposit review. Work through the complete PI, not only its total.
1. Product specifications
Compare each description with the PO, approved samples, drawings, and specification sheet. Check dimensions, materials, finishes, construction, and product codes, since these details affect the finished product.
2. Quantities, unit prices, and total value
Verify each line item, currency, discount, and surcharge. A correct-looking total is not enough: the factory may have carried over an old unit price or added charges for packaging, tooling, or samples that were not agreed.
3. Deposit and balance terms
Confirm the deposit percentage and amount, the remaining balance, and the event that makes each amount due. A 30/70 arrangement is common in some custom-manufacturing transactions, but it is not universal. Clarify whether the balance is payable before inspection, after inspection, or before shipment.
4. Shipping terms and delivery location
Check the Incoterm, named port or location, and applicable Incoterms version. FOB Shenzhen and EXW at the factory allocate responsibilities differently, even if the product price is unchanged.
5. Production lead time and shipping date
Check when the quoted lead time starts. A factory’s “30 days” may run from receipt of the deposit or from final sample approval, not from the date on the PI. Ask for an estimated cargo-ready date when timing matters.
6. Packaging, labeling, and other requirements
Verify carton construction, protection, barcodes, labels, and any agreed knock-down or assembled packing. If these requirements are missing, ask the factory to add them to the PI or explicitly reference the agreed specification sheet containing them.
7. Supplier information and bank instructions
Check the supplier’s legal name, PI number, issue date, validity period, and account details. Independently verify any unexpected bank-account change through a previously trusted contact before sending funds.
What to do if the pro forma invoice is incorrect
List each discrepancy and ask the factory to correct it before approval. For the sofa order, that means restoring the $420 unit price, specifying high-resilience foam at 35 kg/m³, and changing the deposit back to 30%. The factory then issues PI-4312, revision 2.
Review the entire revision rather than checking only the three changed fields. Keep the prior version and the buyer’s approval with the final agreed document so both companies can identify what was accepted before the deposit was sent.
Proforma invoice vs invoice: what happens at shipment?
A pro forma invoice is generally used before production or shipment to confirm proposed commercial terms and arrange a deposit. A commercial invoice documents the sale and shipment, and is used for customs purposes. The balance is often paid against the commercial invoice or shipping documents, depending on the agreed payment terms.
| Item | Pro forma invoice | Commercial invoice |
|---|---|---|
| When issued | Before production or shipment | When the goods ship |
| What it states | Proposed or agreed order terms | Goods sold, quantities, and commercial value |
| Can it change? | May be revised while terms are finalized | Corrections may require amended shipment documents |
| What it is used for | Order confirmation and deposit arrangements | Customs documentation and, often, balance settlement |
For the broader sequence, read Purchase order vs invoice: what importers need to know.
How neet helps importers review pro forma invoices
neet is purchase order management for importers and brands, built around one shared order instead of separate copies. When a supplier prepares a pro forma invoice in spreadsheets or PDFs, the importer must compare attachments and messages to determine which terms were accepted.
In neet, the supplier builds the PI in the shared order. The importer can review details, comment on discrepancies, and request changes, while version history captures revisions and approvals. The same order remains available to both sides as the transaction progresses, rather than ending at the initial deposit.
Purchase order vs proforma invoice FAQ
Is a proforma invoice a quote?
Yes. A pro forma invoice is generally a quotation in invoice format, showing the products, prices, and proposed terms before a transaction is finalized. It is common in international trade where the supplier requests a deposit.
Can you pay a proforma invoice?
An importer can arrange a deposit based on an agreed PI, depending on the supplier’s terms. Verify the details and payment instructions before transferring funds.
Should I pay a proforma invoice?
You should pay only after verifying the supplier and confirming the PI matches the negotiated order. Resolve unexplained differences in specifications, amounts, dates, or payment instructions first.
Is a proforma invoice legally binding?
The answer depends on the wording, acceptance, conduct of the parties, and applicable law. An accepted PI can form part of a binding agreement.
This is general information, not legal advice.
How long is a proforma invoice valid for?
There is no universal validity period. Check the validity date stated by the supplier and reconfirm prices or production capacity if the quote has expired.
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